HomeAway Has Become an Attractive Yet Expensive Acquisition Target
HomeAway Inc.’s rising online vacation rental bookings may persuade suitors to tackle the most expensive Internet deal since 2007 as an improving economy spurs a rebound in travel.
With listings for more than 700,000 homes around the world, analysts estimate that HomeAway will boost sales by about 65 percent in three years. Revenue for all U.S. travel agencies is poised to rise as economic conditions improve, with growth from online booking sites seen fueling the gains, according to IBISWorld Inc. As Priceline.com Inc., Expedia Inc. and TripAdvisor Inc. eye opportunities in vacation rental services, HomeAway may entice takeover interest,Cowen Group Inc. said.
After surging 81 percent this year, HomeAway traded yesterday at 10.3 times its sales, already a higher multiple than any public Internet company has commanded in a takeover in the last six years, according to data compiled by Bloomberg. While the $3.4 billion company faces competition from rivals such as Airbnb Inc., Piper Jaffray Cos. said HomeAway’s dominant position in the growing online vacation rental market makes it worth the price for potential suitors. Even Google Inc. could be interested in a deal, according to Canaccord Financial Inc.
“This whole concept of alternative bookings and travel is a concept that’s here to stay and it’s something that ultimately the bigger players in online travel will need to be participating in,” Michael Olson, a Minneapolis-based analyst at Piper Jaffray, said in a phone interview. “I don’t think people are looking at what the stock has done this year. I think they’re just looking at what the opportunity is going forward, and the opportunity is significant.”